Labour Pains

Whilst many professionals in Europe are still reviewing the potential implications of Brexit—the U.K.’s decision to exit the European Union—the EMEA labour market faces its own challenges in the coming years. On the one hand, a rapidly ageing workforce has left many HR professionals struggling with succession planning; on the other, they’re coming to grips with new trends such as an increasingly freelance labour market and the potential threats and opportunities brought by automation.

Different states in Europe—not to mention industry sectors—are dealing with individual issues. In Spain and Greece, for example, unemployment is more than 25 per cent of the working-age population. Brexit has led to political instability not only in the U.K., but also in other EU countries, with some considering their own referenda. But there are also shared challenges.

“The ageing workforce is definitely a big deal in most European countries,” says Peter Brown, a partner in the HR management practice at consulting firm PwC. “But at the same time, we’ve got the advance of technology and the changing skills employees will require as a result. We’ll need more knowledge-based roles rather than physical jobs. Tech skills will be hot property but [so will] relationship skills, networking, and being able to work with a team—and these aren’t necessarily taught in schools and universities.”

PwC’s 2016 global CEO survey found that 50 per cent of U. K. CEOs want to develop their own pipeline of leaders; this is also true of 45 per cent of CEOs in Germany and 35 per cent in France. Similar proportions were concerned about the negative impact of skills shortages on their business.

Furniture company Herman Miller uses a hybrid approach to ensure it’s addressing this skills challenge. Its U.K. business runs a programme for college graduates in which they receive structured mentoring from someone at executive level. This helps develop those essential leadership and business skills that firstjobbers may not have acquired during their education, says EMEA head of HR Bronagh Day.

“We have one [employee] who has gone on to lead 10 people on the shop floor, many of whom have been here for years and years. Our job is to make sure she’s got those leadership skills to deal with people on a day-to-day basis,” she says.

The company also has a large number of experienced workers who are considering retirement soon, so Day works with regional directors to ensure that they communicate with those individuals and that there is a succession plan in place. “Many of those with professional skills choose to do a phased retirement— maybe going down to four days a week and then three, which means they can share what they know but also be more in control of how they retire,” he says.

Lisa Wormald, director of the HR division of recruitment company Harvey Nash, explains that companies in Europe face a ‘double-whammy’ of losing skills as older workers retire while struggling to skill-up millennial workers coming into the workforce. “Another challenge is around managing millennial and their approach to work,” she says. “But there are also positive aspects to this. They are demanding flexible working patterns—a more adaptable, agile way of working. This may not solve the skills shortage. especially in areas such as high-tech and engineering, but it may help attract people into roles that might otherwise have looked elsewhere.”

Faced with these skills gaps, companies must also make more effort in the attraction and recruitment process, particularly with onboarding and ‘preboarding’ (keeping new starters warm before their first day in the role) gaining in importance. More and more companies are now looking to assess candidates based on personal characteristics as well as competencies in order to see if they are a good cultural fit for the organisation.

“This gives an insight into who they are, and you can personalise the onboarding accordingly. If you know someone’s an introvert, for example, you don’t expect them to do a presentation as part of their induction,” says Kate Heath, head of global RPO for hiring specialist Lumesse. This may also mean more emphasis on building skills internally in EMEA companies. When someone fits most of the criteria for a role, companies can fill those skills gaps through targeted learning and development.

Technology can support organisations both in engaging new employees and in retaining knowledge as experienced professionals leave the business. Brown at PwC adds: “There was a view traditionally that senior managers held all the knowledge in their heads and that was the right way to do things. But now more companies are looking at ‘crowdsourcing’ knowledge [for example, through company intranets, social networks, or talent hubs] meaning they’re able to get richer, more innovative ideas.” Vlatka Hupic, author of The Management Shift, calls this concept the “people cloud”: a more fluid structure where work is provided on demand and traditional generational hierarchies matter less.

Other strategies for addressing skills shortages include enabling younger workers to gain international experience at an earlier stage in their career. Steve Black, co-founder and vice president of technology at MOVE Guides, a global mobility platform, explains that international assignments are no longer only associated with grooming people for senior management. “We’re now seeing people move around units and geographies a lot earlier, as well as a lot more cross-border recruitment as the barriers to moving have decreased,” he says. The advantage of offering global assignments to less-senior employees, he adds, is that there is often less of an associated cost because there may not be a need for spousal and family support.

There may not be much that employers in Europe can do to hold back demographic shifts in the working population, but taking a pragmatic approach to these challenges through more innovative ways to attract, retain, and develop skills can stop the “putting a brake'” on business growth.

Harvey Nash European recruitment metrics

Skills shortages and demographic shifts certainly top the list of challenges in the latest global survey of HR directors from recruitment company Harvey Nash,

Its annual HR survey also paints a picture of staffing professionals increasingly dealing with “diversified employee contracts and work statuses’1 and answering a growing demand for flexibility from workers.

In Europe specifically, the key HR priorities that company boards seek to address are leadership capability (cited by 59 per cent), employee engagement (57 per cent), talent management (56 per cent), and performance management (51 percent).

One area of concern was movement of labour, as more organisations recruit from overseas and at the same time fear a loss of talent from their local talent pool. However, despite concerns that the vote for the U.K. to leave the EU would impact talent strategies, Harvey Nash found that only 6 per cent of U.K. respondents plan to reduce the proportion of people they recruit from overseas. Around a fifth (21 per cent) of respondents from Europe as a whole were concerned about migrating talent, however.

In terms of labor market challenges, they felt they would be likely to face in the next two years, 59 per cent of European HR professionals cited local recruitment challenges, while 55 per cent felt demographic shifts and an ageing workforce would be their top issue.